MOUnting a coordinated approach to enforcement

The ACCC and the National Development and Reform Commission of the PRC (NDRC) have signed a Memorandum of Understanding on Cooperation (MOU), which provides for information sharing and cooperation between the two regulators, subject to confidentiality restrictions.

The purpose of the MOU (dated 5 November 2015) is to facilitate the effective implementation of competition law and policy in Australia and the PRC, including in their enforcement activity. In a media release, ACCC Chairman Rod Sims stated that the MOU “recognises the importance of cooperation in the field of competition enforcement, particularly in the fight against international cartels” and “will allow the ACCC and NDRC to make the best use of available resources and, where possible, coordinate approaches”.

In order to achieve these objectives, the MOU provides a framework for the ACCC and NDRC to coordinate their activities when they both take any action in relation to the same or related anti-competitive conduct or practice (other than a merger), including for the purpose of:

avoiding conflicting approaches and outcomes, including remedies;

reducing duplication of enforcement costs; and

making best use of available resources.

This extends to the sharing information and evidence, and does not limit either regulator’s discretion to take its own action.

In addition, the MOU requires each regulator to notify the other of any investigation or proceedings it takes that it considers may significantly affect the other’s interests. The MOU also provides an option for each regulator to notify the other of any anti-competitive activities in the other’s country that significantly affect its interests. If a regulator provides notification in either respect, it may request a consultation with the other, who must consider whether its actions can be modified so that the concerns raised are addressed and its objectives are achieved.

Although the MOU is only effective for two years, it can be extended by mutual agreement. Both the ACCC and NDRC have agreed to periodically evaluate the effectiveness of the MOU and the activities conducted under it.

China’s enforcement framework

Unlike Australia, competition regulation in the PRC is carried out by three separate bodies:

NDRC, which manages the enforcement of price-related conduct, including cartels and the use of market power to control prices;

Ministry of Commerce (MOFCOM), which is responsible for merger reviews and other types of proposed business concentrations; and

State Administration for Industry and Commerce (SAIC), which is in charge of investigating non-price related monopolistic behaviour.

Although this MOU is the first between the ACCC and NDRC, the ACCC has previously entered into similar agreements with the PRC’s other two regulators. In September 2012, the ACCC and SAIC signed an MOU relation to enforcement and consumer protection, and more recently, the ACCC and MOFCOM signed an MOU in May 2014 designed to pave the way for more efficient reviews of cross-border transactions and investigations (read our previous post here).